After a period of spectacularly low interest rates during which the French borrowed at an average rate of 2.01%, some experts are already announcing that the month of July will reverse the trend and see a resumption of rate towards a general rise.
So, how do we explain this increase and what impact will it have on personal mortgage loans? Here are our explanations in detail.
Why have rates dropped in recent years?
If since the end of 2013, it is particularly advantageous to obtain a loan, this is due to the fact that mortgage loans are indexed to the borrowing rate of the State which has also fallen historically since these last years.
The bad economic period in the eurozone and the repurchases of many assets by the Fine Bank are the factors that lowered this rate to 0.4% during the month of April. As you can see, when government borrowing rates fall, so do loan rates.
Why is the hike up and running?
The French situation will change over the next few months because the country’s economic prospects are gradually improving. This is why the French government borrowing rate is already picking up colors and is slowly rising again and reached 1% in June. It is therefore good news for the State but an announcement which worries individuals wishing to take out a loan at a rate as attractive as in recent months.
What repercussions on loan rates?
The repercussion is by no means dramatic since since the announcement of this (slight) improvement, only a handful of banks have raised their rate from 0.10 to 0.30%.
In short, if you plan to buy with a mortgage, the rate will not double and even less triple in the months to come! It will simply return to rates similar to January 2015. And in sum, even if the rates go up slightly, they remain historically low.
Will borrowing rates still be good next year?
Borrowing will always be more advantageous than before 2013. However, we must not lose sight of the fact that the economic gloom will gradually dissolve and that thus, credit rates will rise slowly but surely. The tone is set for the last half of 2015 and the trend is likely to continue in 2016. However, do not panic, if the discontinuous fall in credit rates will undoubtedly end, rates will not suddenly rise in a few months. Remember that there is still time to renegotiate your loan at attractive rates.
And you, did you take advantage of the lower rates to borrow? Do you think that the rates will always remain attractive within a year? Let us know your point of view, the blog is there for that!